Item 1.01
Entry into a Material Definitive Agreement.
Effective June 9, 2016, Mattress Firm, Inc. (MFI), a Delaware corporation and wholly owned subsidiary of Mattress Firm Holding Corp., a Delaware corporation (the Company), entered into a vendor supply agreement (the Supply Agreement) with Sherwood Bedding Holding Company, LLC, a Florida limited liability company (Bedding), Sherwood West, LLC, a Delaware limited liability company (West), Sherwood Southeast, LLC, a Florida limited liability company (Southeast), Sherwood Southwest, LLC, a Florida limited liability company (Southwest), Sherwood Midwest, LLC, a Florida limited liability company (Midwest), and their future affiliated bedding manufacturing companies (Bedding, West, Southeast, Southwest, Midwest and their future affiliated bedding manufacturing companies are collectively referred to as Sherwood). The Supply Agreement is attached to this Current Report on Form 8-K as Exhibit 10.1.
Unless terminated earlier in accordance with its terms, the Supply Agreement has a three year term starting on July 1, 2016. The Supply Agreement supersedes and replaces the existing supply agreements between MFI and Sherwood and sets forth the minimum volume of purchases that MFI is required to make from Sherwood each contract year, the volume rebate, as well as the general terms relating to, among other things, payment, warranties, indemnification, intellectual property rights and delivery applicable to purchases of products by MFI from Sherwood.
Pursuant to the Supply Agreement, MFI may order from Sherwood proprietary products that are the result of the parties collaborative efforts and other non-proprietary products that are manufactured by Sherwood. Sherwood establishes the prices for all products supplied to MFI; however, the parties must mutually agree on the initial price of any proprietary products. Sherwood may only change the price of products upon providing 60 days written notice to MFI and in the case of proprietary products, MFI must consent to those changes. Under the terms of the Supply Agreement, Sherwood is prohibited from manufacturing for, or selling to, any third party any of the proprietary products or any developed or otherwise created intellectual property contained in such products.
Either party may terminate the Supply Agreement for the other partys breach of any material covenant or obligation that remains uncured for 15 or more days after receiving written notice of the default. MFI may also terminate the Supply Agreement upon certain changes of control of Sherwood, in the context of force majeure, or after July 1, 2017, for convenience by paying an early termination fee and providing 12 months written notice to Sherwood. Sherwood further has a termination right if MFI fails to meet, on an annual basis, specified volume targets with respect to its product purchases from Sherwood.
The foregoing description of the Supply Agreement is qualified in its entirety by reference to the full text of the Supply Agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated herein by reference.